FTSE stocks suffered in recent weeks as fear spread from the banking sector. But now investors’ concerns appear to have largely passed and a recovery, albeit with some bumps, could well be on the cards.
So here’s two stocks that slumped in recent weeks but could be on for a rally in the coming months.
Standard Chartered
Standard Chartered (LSE:STAN) is among those stocks hardest hit by the banking sell-off in recent weeks. The UK-based bank — which earns around 90% of its profits from Asia, Africa, and the Middle East — is down 15% over a month.
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It was a victim of concerns about unrealised bond losses and broader fears about the health of financial system as interest rates rise. However, these concerns have largely been put to rest, despite continuing appetite from central banks to tackle inflation.
I’m not saying investors should consider the impact of unrealised bond losses, but it has to be put into context. Big, well-regulated banks like Standard Chartered have more diverse bond holdings than the ill-fated Silicon Valley Bank.
There are several reasons why I’ve recently added Standard Chartered to my portfolio. Firstly, I believe a potential takeover provides something of a backstop against further downward pressure on the share price.
Secondly, the bank offers good value, currently trading with a price-to-earnings of just 7.9. Private banking company Berenberg has made Standard Chartered its top pick in the sector, noting faster earnings per share growth of 30% annually, ahead of HSBC at 20%.
Finally, there’s the school of thought that bigger banks, like Standard Chartered, could benefit as capital seeks safety.
Vistry Group
I think it’s time to reconsider the housing market, despite rate rises. Yesterday, Vistry Group (LSE:VTY) rose on better-than-expected full-year profits. The group said market conditions were improving.
Vistry said it was seeing an improved sales trend in the first 11 weeks of the current fiscal year. The year-to-date average private sales per site per week currently sits at 0.54, but the per-week rate has risen to 0.62 in the last four weeks. Customer confidence has improved significantly since Liz Truss’s disastrous budget, it added.
We know financial conditions aren’t ideal for housebuilders, and that’s not helped with Bank of England rates now at 4.25%. But I’m reassured by the idea that we’re at, or near, the terminal rate. Things should be getting better soon.
Vistry is also boosted by its affordable housing, or ‘partnerships’, side of business. It’s a key segment for Vistry and its typically more resilient. In theory, this area of business should continue to grow steadily in the near future with the government missing its own affordable housing targets.
With the share price down 8% over one month and 30% over a year, the dividend yield currently sits at a very attractive 7.4%.
